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GIF by Tom Abi Samra

Break Up Big Tech

The growing power of Amazon, Google and Facebook needs to be addressed.

Mar 16, 2019

Over the past week, United States Senator Elizabeth Warren – as part of her bid for the Democratic nomination in the 2020 U.S. Presidential election – announced a plan to break up Amazon, Facebook and Google, by reversing recent “anti-competitive mergers” and designating these firms as “platform utilities.” The reaction was predictable: some of Warren’s fellow Democrats supported the idea, while Republican-leaning publications criticized the proposal.
Yet the monopolies possessed by these firms is an issue that transcends the machinations of Washington D.C.. Proposals similar to those put forth by Warren may be the only option to restore competitive balance, encourage innovation, reduce the political power of these firms and prevent economic disaster.
While Amazon, Facebook and Google may not meet the legal definition of traditional monopolies, they do possess similar capabilities insofar as their ability to stifle competition is concerned. All three companies wield complete power over their respective sectors of the tech world: any competitor can be crushed or even better, bought. The latter was the case for both Instagram and [WhatsApp] (, both of which emerged as a threat to Facebook’s social media and online messaging primacy and were subsequently bought out by the tech behemoth.
When money doesn’t work, the bigger technological firms can always resort to imitation. After Snapchat resisted Facebook’s overtures, both Instagram — owned by Facebook at the time — and Facebook itself copied Snapchat’s signature “Stories” feature. The [combined reach] ( of these “imitated” stories features is more than thrice the reach of Snapchat’s total user base.
Snapchat is a real success story in the minefield of modern tech, where startups are struggling like they have never before. The incentive to finance innovation has also decreased, since no one can match the financial and technical capabilities of Facebook or Google. Some may suggest that this is not a problem, as it is the natural result of the “free market.”
And yet, “free” may be a misnomer for such a market. After all, all three of these companies also act as a “marketplace” for goods and services – markets in which their own products operate. For example, Google has been known to use its search engine and Android operating system to discriminate against possible competitors. Even more sinister is Amazon, where small businesses compete with Amazon’s own products, often replicas of the original, on Amazon’s website. When companies act both as providers and arbiters of product, then the market ceases to be free.
Additionally, the monopolistic nature of such firms allows them to prioritize monetization of their products over the actual consumer experience. As the likes of Facebook and Google are not overly concerned about users being dissatisfied – as firms in competitive markets would be – they are more willing to sacrifice consumer welfare for advertising revenue. This is perhaps best encapsulated by the Cambridge Analytica scandal, where Facebook’s questionable data harvesting methods were brought to light. If Facebook had viable competition – like an independent Instagram – then perhaps the firm wouldn’t have been as irresponsible with user data. Amazon and Google’s own data scandals, along with Facebook’s failure to crack down on fake news can all be traced back to a monopolistic market where the advertiser — the beneficiaries of data harvesting — is king.
Yet, while much of the focus has been on the recent past of these firms, what is even scarier is what they haven’t done. After all, the power of these firms can’t be measured solely in terms of market share, but also in terms of content. Facebook and Google account for 70 percent of total web traffic. Already, more U.S. Americans get their news from social media rather than from print newspapers. Similar trends have been observed worldwide. This domination of news content provides these firms with an opportunity to influence the gathering of information on a scale that is unprecedented.
Indeed, Facebook, and its subsidiaries, has already been deemed allegedly responsible for the outcome of elections, from the United Kingdom to Brazil. That was without any attempt from the company themselves to influence the result. If they really wanted to, Facebook and Google could affect elections and democracy in a manner that is wholly Orwellian. In their current form, the only thing preventing such election interference from Google or Facebook is the conscience of their management. After the last few years, we really should know better.
Furthermore, the economic power of these firms is simply astounding. The combined economic impact of Google and Facebook is around 510 billion dollars — larger than the Gross Domestic Product of all but 23 countries. In that sense, they can be compared to Wall Street firms before the Great Recession. The world economy is so dependent on Google, Amazon and Facebook, that they too have become “too big to fail” — not in the sense that they cannot fail, but rather insofar as the fact that the ramifications of failure would be such that governments would never allow it to happen. If the fallout of Lehman Brothers’ bankruptcy could cause a global recession, imagine the impact of Facebook or Google collapsing.
Some may agree with the above criticism of these tech companies, but will recoil at any thought of antitrust legislation like what is championed by Warren. According to such critiques, “breaking up” these companies may set an unfortunate precedent of government power over private firms. They would instead prefer increased regulation. Indeed, even the European Union’s Competition Commissioner — one of the chief crusaders against these firms — has cautioned against such a move, suggesting that stronger regulation may be a better solution.
Indeed, a more gradual approach may work in places with strong regulatory institutions like in the European Union. However, in most nations the economic and political power of Amazon, Facebook and Google is such that any unfavorable regulations would likely be temporary. Take Amazon’s much publicized search for a second headquarters in the United States. The possibility of Amazon coming to their city, and the jobs it would bring, had local politicians bending over backwards to provide incentives. If the prospect of a headquarters can have such an impact, imagine what would happen if one of these firms threatened to leave a country because of its stringent regulations, especially a small developing one. In the long run, any particularly unfavorable regulations would be eliminated.
The only way to end this monopoly is to change the very nature of these companies as economic giants with little to no competition. For that purpose, Warren’s proposal is a good first step.
Abhyudaya Tyagi is Opinion Editors. Email him at
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